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Europe: +44 (0) 207 198 1634 Good morning. After pushing to record highs last week U.S. equities retreated yesterday. The Dow, which closed for the first time last Thursday over the psychologically important 17,000 number (it has no meaning looking at the charts technically), fell 44 points to 17,024, the S&P 500 lost 8 to 1,978 and the Nasdaq fell 34 to 4,451. Volume, at 2.6 billion shares, was well below average volume of 3.2 billion shares. Many investors look at volume as confirmation of a trend. Low volume means less conviction. Corporate earnings season is once again upon us and investors don’t want to place big bets ahead of the data which is a reason why volume was light. Stocks are obviously trading at all-time highs and investors will need corporate America to deliver on profits to justify a further price rise. It all begins today after the bell with aluminum giant Alcoa as usual reporting first.
This morning the market is getting whacked with the Dow down 113 points. Not helping us was the release by Great Britain today of a report showing month-over-month industrial production falling 0.7% which was the worst since January 2013. It’s worth mentioning this report followed yesterday’s disappointing industrial production reading from Germany of -1.8% versus an expected 0.2% rise.
We came in after the long weekend and natural gas just got pummeled falling 18.1¢ settling at $4.225. Traders have been playing the market long all summer and they came in yesterday to a weak cash market and a weather forecast showing no heat in the eastern U.S. through the 3rd week of July. Now remember, the August futures contract expires a week after the last day of the current 11-15 day forecast and then the September contract becomes the prompt month which means we’re out of summer (if you’re a futures trader). Basically, the bulls are running out of summer (pun intended with that festival currently going on in Pamplona). This morning the erosion continues with natty down 5.5¢.
Like natural gas oil continues to slip lower with WTI closing down 53¢ at $103.53 and Brent off 40¢ to $110.24. You can blame the talk of increased exports from Libya as well as a stronger U.S. dollar with the latter driven higher on the good jobs report last Thursday. WTI prices have fallen for 6 consecutive sessions and are the lowest in a month. Have you seen any changes at the pump? I haven’t. But let’s not be naive. We all know how the system works. Fast to rise. Slow to fall. There’s been studies showing that. WTI is falling this morning in sympathy with equities being down 19¢. Have a nice day.
